When you purchase a new home in San Miguel de Allende, your agent will prepare an Offer to Buy, which will include the offered price, the proposed payment plan, down payment which usually corresponds to 10% of the purchase price and conditions or contingencies. There will be an addendum to address the included items (Furniture, appliances, etc.). In Mexico an offer to buy is a binding legal instrument that can be enforced by either side.
After negotiations, when both parties have come to an agreement and signed the Offer To Buy, a Purchase and Sale Agreement / Compra Venta contract will be drafted by your agent / broker.
Foreigners need a special permit issued by the Mexican Ministry of Foreign Relations called SRE, which is a government issued permit that will allow you to buy property in Mexico. The cost of this permit is approximately $400 USD per person. It usually takes 5 business days to get this in place and is valid for 6 months.
The notario requires the buyer provides a tax id number or a RFC number.
Typically the 10% earnest deposit will be a wire transfer to the broker’s escrow account, or some Mexican banking institutions are now offering a "Conditioned Payment Contract" which works like an escrow account. Intercam, Actinver and CI Banco offer these services.
We recommend Armour Secure Services, (Formerly Fidelity, LLC) an American company for Escrow services. The service charge varies from $400 to $600 US.
An inventory list specifying the things that will stay in the property will be attached to the purchase contract as Exhibit or Addendum A.
We recommend a Feasibility Period of 7 days to inspect the title and property for structural, electrical, and plumbing and fixtures issues.
The closing has to take place with a "Notario" where the buyer and seller or their POA’s will sign the "escritura" (Title Deed). Closing costs (including Notario’s fee) are usually between 4 and 6 % of the agreed amount of the purchase, on top of the cost of the SRE´s. All closing costs, with exception of the capital gains tax if applicable, are paid by the buyer. In rare instances the buyer is required to pay capital gains if the sales price is below the government’s appraisal.
Notario services included in the closing costs:
• Command a professional appraisal of the property.
• Notify the public registry that the property is under contract.
• Issue a preventive notice.
• Title Search, up to ten years past, to verify it has no liens.
• Get your SRE´s.
• Draft the deed and and be present at it´s signing.
• Submit a definitive notice to the public registry and register the deed.
• Retain and pay to the government the taxes on behalf of the parties.
Once the Title Deed is signed and the Notario receives proof of payment, he will proceed to register the original Title Deed at the Public Property Registry. The new owner(s) can get a testimony of the final registered document approximately six weeks after the closing.
We recommend using Jose Luis Sautto #11 as your notario